We see a rather big selloff in oil (although, to put that in perspective, prices are back to where they were half a year ago or so, when they were considered excessive), but this is a temporary effect due to falling demand as the world economy falters. It’s not likely to last.

At least according to oil price guru Charles Maxwell:

Maxwell: $300 Oil by 2015 on Short Supply

• Monday, September 8, 2008 11:12 AM. Oil price guru Charles Maxwell sees oil prices reaching $300 a barrel by 2015 because of supply shortage.
• Four years ago the senior energy analyst predicted that oil prices would move higher by 2010, and then continue to soar. Back then, his top price was $60 a barrel. But now, Maxwell’s revised that sharply upwards.
• “We are not going to have enough oil, and we are going to have to start a huge switch in which we make do with a number of other fuels that are not so easy to convert to our immediate energy needs, mainly for transportation,” Maxwell told Barron’s.
• But even by 2010, Maxwell says more than 50 percent of the non-OPEC world will have peaked in its production of oil, so the dependence on OPEC will “become extreme.” That will allow OPEC to raise prices on oil even faster than they’re currently doing, he says.
• Maxwell cites five factors that are affecting the supply of global energy, especially oil: resource nationalism, political instability, political restraints, geological issues, and the shrinking number of existing fields.
• According to Maxwell, 40 percent of the world’s energy was in oil 10 years ago. That shrank to 39 percent in 2006. It should reach 38 percent in the next five years, and 37 percent three years after that.
• He predicts oil-use growth will stop around 2015, at which point the supply will begin a slow retreat. At that point, Maxwell says, “We will either have to reduce our economic growth around the world, which has all kinds of political and social repercussions attached to it, or we will have to find a substitute for oil.”
• Maxwell doesn’t consider natural gas as a viable substitute. While its supply should last another 40 to 50 years before it runs into the same problems of peaking that we’re currently facing with oil, he says natural gas doesn’t help now to solve the principal problem, namely oil supply, particularly for transportation uses.
• “The price is eventually the only thing that will slow down the use of oil,” Maxwell says. Oil prices are moving lower in general as the dollar rises and global demand shrinks. And that’s okay, a major oil-country minister says.
• Oil markets are now well-supplied. The recent price declines showed that prices had risen in way that was out of touch with real demand, United Arab Emirates Oil Minister Mohammed al-Hamli told his country’s official news service on Monday.
• OPEC’s policy is to ensure markets are supplied, he said, and that will continue. “The recent decline in prices simply shows that the oil price had risen too high and too fast,” Hamli said.

Notice he doesn’t think natural gas would help, but that’s for transportation problems. Boone Pickens who devised an energy plan has a solution for that, switch cars massively to natural gas (and substitute natural gas in electricity production to wind energy), although we ran a story with a top scientist arguing nat gas would not cut it for transportation.

Whatever the situation is, energy is becoming scarcer, which reduces options and increases prices. The present correction is temporary due to the weakening of the world economy.